Equity Funds Set For Record $55B Monthly Inflow: TrimTabs

By Brendan Conway

Investors are feeding money to stock funds at a record-breaking pace this month, according to TrimTabs Investment Research.

$55.0 billion has bee invested in all equity mutual funds and exchange-traded funds in January, by the firm’s count. The previous record: $53.7 billion in February 2000, “which was just before the technology bubble popped.”

Traders of leveraged ETFs — who, whether hedging or just poor market timers, tend to get more active in bearish funds when times are good — have been skeptical, pushing up leveraged short ETFs’ assets by more than seven percent. Most of the time, that’s actually a good sign for stock prices in the short run.

When it comes to ETFs, investors have shown a heavy preference for emerging markets and global stock funds. The top asset gathering ETF this month is iShares MSCI Emerging Markets (EEM), whose net inflows stand at $3.4 billion. The tech-heavy PowerShares QQQ (QQQ) is next in line, gaining $1.5 billion. Vanguard FTSE Emerging Markets (VWO) is third at $1.4 billion. iShares MSCI EAFE (EFA) and WisdomTree Japan Hedged Equity (DXJ) round out the top five with $1.1 and $1 billion, respectively.

Corporate treasurers are selling into the rally, according to TrimTabs: “As investors stampede into equities, corporate America is not joining the party. So far this month, corporate selling (new offerings + net insider selling) of $16.9 billion has been $5.0 billion higher than announced corporate buying (new cash takeovers + new stock buybacks) of $11.9 billion. We had expected buyback announcements to ramp up this week, but that did not happen. Only ten companies announced a total of $2.2 billion in buybacks, down from $22.6 billion in the same week a year ago and $26.5 billion in the same week two years ago.”

About Focus on Funds

As exchange-traded funds and other investing vehicles have ballooned in number, the task of figuring out what works well and what doesn’t has only gotten harder. Barrons.com’s Focus on Funds looks under the hood of ETFs, mutual funds and hedge funds for overlooked values, actionable ideas and the latest pitfalls for fund investors.

Chris Dieterich has covered the U.S. stock market for The Wall Street Journal and Dow Jones Newswires. He is a graduate of Regis University and the Missouri School of Journalism.